September 13th, 2011

PIP stands for personal insurance protection (personal injury protection), and it is an extension of car insurance that covers medical expenses and, in many cases, lost wages. It is often called “no-fault” coverage because its inherent comprehensiveness pays out claims agnostic of who is at fault in the accident.

If you have PIP insurance and are hurt in accident, you can receive maximum benefits whether or not the accident was your fault. On top of medical bills and lost wages, PIP insurance can also cover expenses like transportation to medical appointments and lawn repair.

PIP insurance is mandatory in 13 states: The District of Columbia, Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania and Utah

What is covered by PIP varies for state-to-state, in terms of what each state believes is customary and reasonable. In Utah, for example, acupuncture is a permissible medical treatment under PIP, while in California it is not.

PIP is similar to Med Pay insurance in that it will cover injury costs stemming directly from the accident. The main difference is that PIP is actually more comprehensive and will even compensate you for lost wages. PIP insurance is therefore more expensive than Med Pay is.

These states chose to make PIP insurance compulsory in the hopes of limiting the number of lawsuits filed against at-fault drivers. While PIP has helped free up the courts to a certain degree, there has been a backlash of sorts from consumers who feel their right to file lawsuits were subverted by the laws. In response, each of the 12 states have subsequently written laws that allow drivers to bring lawsuits against other drivers in specific circumstances. PIP insurance is optional in the other 38 states.

In a nutshell, PIP insurance removes the question of blame from the car insurance equation. Each driver’s policy pays for damages to that driver based solely on his or her needs. Rate fluctuations are therefore based on the frequency and severity of your car damages, not whether you are -- or are not -- frequently at fault.

It should come as no surprise that PIP insurance is more expensive than traditional insurance. Feel free to shop around for the best price, and do a cost analysis relative to the price of collision or liability insurance.